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Home Grown Aid – DFID highlights importance of Remittances

A new survey reveals a third of ethnic minority families in London send money home to Africa and Asia to fight poverty.

More than a third of ethnic minority households, who responded to a UK-wide survey, sent an average £870 back home to their families living in some of the poorest parts of Africa and Asia last year, according to a new report published today by the UK Department for International Development. The research is the most comprehensive look at the private money transfer habits of Britain's Asian, African, Caribbean and Chinese communities. Nearly half (45%) of the UK's ethnic minority population live in London.

According to reported research by the World Bank remittances have helped cut the share of poor people in Uganda by 11% and by 5% in Ghana. This survey was carried out by ICM Research on behalf of the Department of International Development between February and March 2006 in all 12 regions of the UK. Interviews took place across central and greater London. A total of 28,000 households were approached of which 7,051 responded to the survey.

Key Findings

According to Gareth Thomas, UK Minister for International Development, "Sending money home to families in developing countries plays a vital role in helping to tackle poverty, but until now there was little detailed information on what contribution ethnic minorities in the UK made. "This new survey fills this gap, and improving understanding will help banks, community groups and financial service providers offer more options to people wishing to send money home to relatives."

Official IMF statistics reveal that $230 billion worth of remittances were sent to developing countries worldwide. The survey highlights the fact that about 38 per cent of ethnic minority households who responded to the survey sent an average of £870 back home in 2005. Of the 50 plus developing countries receiving money from the UK, the five largest recipients were Nigeria, India, Pakistan, Jamaica and Ghana.

Other key findings for the survey revealed that:

The average income of the senders was £22,000 and 70 per cent were between 25-44 years old

In almost 50 per cent of cases people were sending money to their parents, another 25 per cent to other close relatives like cousins and 15 per cent were sending money to spouses and children;

31 per cent of senders said the money would be used to buy food, 21 per cent said it would help with medical bills and 17 per cent reported the funds would help pay for schooling; and

80 per cent said the money would make a real difference to the lives

Remittances vs. Investment

Many poor countries receive more in money sent back by relatives than they do from overseas companies investing in the local economy. For instance, Ghana receives around 10-15 % of its national income from remittances sent from around the world, compared with around 3% from foreign investment. The survey also indicates that 15 % of people exclusively used informal methods, such as sending money with friends or relatives travelling back home.

The Department for International Development helped set up the UK Remittances Task Force which includes members from the British Bankers' Association, Barclay's bank, the Post Office, MoneyGram International, VISA Europe and ICICI Bank. The task force is looking at reducing barriers and costs to remittance flows, improving data and reducing barriers for firms to enter the remittances market. It will present its findings in a report to the government early next year.

DFID has provided up to date information on the services offered by different money transfer providers in the UK customers through a website: http://www.sendmoneyhome.org